Size matters in EU affairs - and Ireland is a small island compared to Iberian peninsula

ANALYSIS:The reply to any appeal by Ireland for new debt terms will likely be: ‘if it ain’t broke, don’t fix it’, writes
DEAGLÁN de BRÉADÚN

THE MAIN political impact here of the Spanish programme of assistance will be to increase pressure on the Taoiseach and the Government to secure better terms on Ireland’s bank debt.

But from a domestic political viewpoint, the Government can be grateful that the recapitalisation funds of as much as €100 billion are to be placed at the door of the Spanish state, and not its banks.

Had the European aid been left as the sole responsibility of the Spanish banks, there would be much weeping and gnashing of teeth on the Irish scene. Enda Kenny would be facing demands to make loud and long appeals to our EU partners for equal treatment.

As it is, he will have to contend with the critics pointing out that Spain is not being locked into a Troika-style programme and there will be no Ajai Chopras knocking at the door of the government in Madrid.

Dealing with Europe is a delicate business. In the midst of the Northern Ireland crisis, Conor Cruise O’Brien wrote that then-taoiseach Jack Lynch needed to be able to make gestures that were visible in Ireland but invisible in England, and vice-versa. Likewise, it could be argued that Kenny needs to make gestures that are visible in Brussels and Berlin but invisible back home, and the other way round.

Our EU partners could quite conceivably say: “Okay, we’ll ease the terms of your debt in return for harmonised corporation tax.” The Taoiseach spoke to German chancellor Angela Merkel the day of the referendum result and told a news conference afterwards that he had raised the issue of bank debt in that conversation.

But anyone who imagined the Taoiseach reading the riot act down the phone line was quickly disabused when the Opposition, with Micheál Martin to the fore, pressed him mercilessly for more detail, at Leaders’ Questions in the Dáil, as to what exactly was said, and forced Kenny to take refuge in vague generalities.

The procedures in place now for a narrowly focused recapitalisation of the banks did not exist at the time of the Irish bailout, but there is an argument for Ireland to be allowed to negotiate a new deal in similar terms. The response of the Germans and their supporters would probably be to leave things as they are, on the basis that the current troika programme hasn’t got far to go and, “if it ain’t broke, don’t fix it”.

That won’t play very well with the hard-pressed Irish punters. But it seems that in EU affairs, size matters and Ireland is a small island off the continental shelf in comparison with the giant of the Iberian peninsula. Likewise, Cyprus is in line for an EU funding boost but will probably have to submit to a troika programme similar to our own.

Already the political byplay has started here, with Fianna Fáil’s Michael McGrath calling on the Taoiseach and Minister for Finance to “start fighting Ireland’s corner in a more vigorous and forceful way”, and observing that “the endless ‘technical talks’ on the promissory note arrangement seem to be going nowhere”.

Sinn Féin’s Pearse Doherty contrasted the effectiveness of Madrid and Dublin: “Clearly the Spanish government has secured a better deal than that accepted by the Irish Government.” Seasoned political operator that he is, Michael Noonan was quick off the mark at the weekend. He pointed out that he himself had taken part in the Eurogroup teleconference and was therefore part of the collective response to the Spanish banking crisis.

What’s good for General Motors is good for America, as they say, and Noonan argued that what helps to stabilise the Spanish banks also increases confidence in the euro zone and has knock-on beneficial effects for Ireland.

Minister of State Brian Hayes followed up with Part Two of the Government’s pre-emptive strike on RTÉ’s This Week yesterday.

He insisted that “to present this as some better deal for Spain is just not right”, because the Spaniards have to get their deficit down below 3 per cent by 2014, involving “very, very difficult choices in terms of tax and expenditure”,/ whereas in Ireland’s case it is 2015. The Government would continue to press for a “re-engineering” of the promissory note which was effectively paying the toxic debt incurred by the failed Anglo-Irish Bank. This was “a medium-term project”, he said.